In a recent interview, billionaire investor Howard Marks warned against overconfidence in Artificial intelligence (AI), underlining that the technology’s transformative potential does not make it immune to market crashes.
What happened: Marks, the co-founder of Oaktree Capital Management, shared his thoughts on AI stock with CNBC on Tuesday. He recognized the technology’s potential to revolutionize the world, but warned that this alone does not guarantee the success of his underlying businesses, Business Insider reported.
“Every bubble arises from a widespread belief,” Marks said. “Everyone believes in A, invites the beneficiaries of A to climb to the moon. It turns out that’s an exaggeration.
Marks drew parallels between the current trend of investing in AI and the dot-com bubble of the late 1990s, where the emergence of the Internet led to a surge in stock prices. However, many of these stocks ended up being worthless.
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While he recognizes the potential of AI, Marks highlighted the difficulty in determining the appropriate representation of AI in investment portfolios. He also expressed skepticism about macroeconomic forecasts, warning against over-reliance on Wall Street forecasts.
Because matter: Marks’ cautionary stance on AI stocks is in line with his previous skepticism of market trends. Earlier this year he expressed skepticism about the intrinsic value of Bitcoin Bitcoin/USD and gold, suggesting high-yield bonds as a safer investment option.
Other market veterans have also raised the alarm about the current market climate. In February, investment veteran Bill Smead warned that the AI stock craze could come to a bad end, warning against the allure of popular stocks and the AI boom.
These warnings come in the wake of the AI-driven tech stock bubble that has seen a significant sell-off since April 12, raising concerns about the sustainability of the current market trend.
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